Make loans easy for core cos: Govt

NEW DELHI: The government has asked banks to consider giving cheaper loans to the infrastructure sector even beyond the prescribed sectoral limits. The move comes even as three of the country���s leading public sector banks ��� State Bank of India (SBI), Punjab National Bank (PNB) and Uco Bank ��� have indicated that further reduction in their lending rates is possible provided the Reserve Bank of India (RBI) reduces the key policy rates, repo rate and the cash reserve ratio (CRR).

Repo rate is the rate at which the central bank provides short-term lending to the commercial banks and CRR is the ratio of cash balances the banks are required to keep with RBI.

���We have decided to give loans to certain sectors beyond their sectoral limit in extreme circumstances. The facility would be available especially for our existing borrowers and the decision would be taken on a case-to-case basis,��� Uco Bank chairman and managing director S K Goyal told ET, after the meeting of the chief of public sector banks with the finance secretary.

Also, the public sector banks have said they would relax the borrowing procedure for loans to real estate, steel, auto and export sectors apart from easing norms for loans to small & medium enterprises (SME). Each bank has internal limit on the exposure it can have in a particular sector.

���There is pain in some sectors like realty, export and SMEs. We have decided to consider the matter sympathetically,��� PNB chairman K C Chakrabarty said. On reducing interest rates, Mr Chakrabarty said his bank has been the front-runner in reducing rates and it would further cut rates on appropriate signals from RBI.

Mr Goyal of Uco Bank said the bankers and finance secretary Arun Ramanathan discussed issues related to reducing the rate of interest and providing financial assistance beyond the prescribed norms to specific sectors.

���Some sectors like steel and automobiles have been giving presentations to the prime minister for cheaper and easier loans. The prime minister has referred the matter to the finance secretary to find a solution in the wake of the stimulus package likely to be announced soon,��� Mr Goyal said. He also said that Uco Bank would consider a further cut in its prime lending rate (PLR) ��� the rate at which banks give loans to their prime borrowers ��� if RBI reduced the short-term borrowing rates.

A senior official in SBI said the bank���s asset-liability committee is considering a revision in its lending rates and a decision may be taken soon after RBI decision to reduce the repo rate. Banks are expecting a 100-150 basis point reduction in repo rate by RBI.

Most of the public sector banks have PLR in the range of 12.75-13.25%. PNB, however, has the lowest PLR among all banks at 12.50%. PLRs of private sector banks are in the range of 16-17%.